Members of Germany's Social Democrats (SPD) voted in favour of a coalition with Chancellor Angela Merkel's conservatives on Sunday, opening the way to a new government for Europe's largest economy.

Two thirds of the membership backed the deal, a party official said -- a wider margin than many had expected -- ending more than five months of political uncertainty after an inconclusive election.

The result is set to hand long-serving chancellor Merkel a fourth term in office at a time when the European Union is looking to its largest country for leadership on a host of economic and security issues.

It clears the way for a re-run of the "grand coalition" that has governed Germany since 2013.

Acting SPD leader Olaf Scholz said at the party's Berlin headquarters: "The vast majority of SPD members followed the party leadership's suggestion."

"We now have clarity: the SPD will join the next German government," he added.

Scholz had said on Saturday turn-out in the poll had been "very, very high" after an intense internal campaign that pitted the party's pro-coalition leadership against its more radical youth wing, which campaigned for "No".

The SPD initially planned to go into opposition after a disastrous result in September's election, but agreed to negotiate with Merkel's conservatives after talks with the pro-business Free Democrats (FDP) and the environmentalist Greens on a three-way tie-up collapsed in November.

They thrashed out a coalition agreement which SPD leaders hailed for its commitments to strengthening the EU and giving them some key government roles

Merkel could be sworn in as Chancellor by mid-March.